Attention older adults!  Did you know open enrollment starts October 15th. Now is the time to evaluate your current health and identify if you will need more services in the year ahead. If you have been putting off healthcare because of the pandemic, your medical coverage is even more crucial.  “It’s a question of what people need to think about; about what’s most important to them,” says Tricia Neuman, senior vice president and director of Medicare policy at the nonpartisan Kaiser Family Foundation (KFF). She offers the example of prescriptions. Taking time to make sure prescription drugs are covered “could mean a difference of hundreds or even thousands of dollars”. 

Like many government programs, Medicare is complicated and can be hard to understand. “People find the process overwhelming and frustrating,” Neuman says. “There are often dozens of plans in their area and many people find it very difficult to make comparisons.” She goes on to say it is crucial to take the time to annually review your coverage because it can mean you find the care you need at a cost you can afford.  This blog will attempt to simplify the programs and benefits of Medicare so you can make an informed decision on your coverage. 

What Is Medicare?

Medicare is the federal government’s health insurance program. It primarily covers adults 65 and older and people with disabilities. Both Medicare and Medicaid are administered by the Centers for Medicare and Medicaid Services. Medicaid is a different program than Medicare. Medicaid offers healthcare to eligible low-income people of all ages. In 2018, Medicare-covered 59.9 million older adults and spent $741 billion on their health care. This makes it the second-largest social insurance program in the county, just behind Social Security. 

Because Medicare does not cover all medical costs, there are several supplemental versions.  However, these versions may not be available where you live. There are four Medicare programs. Medicare Part A, Part B, Advantage, which is a comprehensive version (Part C), and Part D. Parts A and B are often called Original Medicare. There are also supplemental plans such as Medigap.  Let’s talk about each. 

What is Medicare Part A?

Medicare Part A covers inpatient care in a hospital or skilled nursing facility. It does not cover custodial or long-term care. Short-term care at a certified skilled nursing facility following an inpatient hospital stay is covered. Covered services include a semi-private room, meals, skilled nursing care, and other services, such as physical therapy and occupational therapy.  Part A also helps pay for hospice care and some home health care. You will have a deductible with Part A. In 2021, it was $1,484. You may have to pay co-insurance in certain situations. 

You are eligible for Part A if you meet one of the following requirements:

  • You are 65 or older
  • You’ve received disability benefits from Social Security or the Railroad Retirement Board for at least 25 months
  • You receive disability benefits because you have Amyotrophic Lateral Sclerosis (ALS) or Lou Gehrig’s disease
  • You have End-Stage Renal Disease (ESRD) and meet certain requirements

If you paid taxes on Medicare through your paychecks for more than ten years, you may not have to pay Part A monthly premiums. There is a handy eligibility calculator on the Medicare website that will tell you. If you have to pay for Part A, the monthly premium is either $259 or $471 in 2021, depending on your work and Medicare tax history.

What is Medicare Part B?

While Part A covers your hospital stay, it does not cover the cost of treatments you receive while there. Nor does it pay for outpatient medical care. That falls under Part B. Medicare Part B  covers doctor visits and the cost of medically necessary services. These services include the supplies, tests, or other health care needed to diagnose and treat a medical condition. Part B also includes preventive health care, as well as ambulance services, durable medical equipment, both inpatient and outpatient mental health coverage, and some prescription drugs. Premiums start at $148.50 per month. Older adults with an income over $88,000 for singles and $176,000 for couples will pay more. Medicare Part B has a $203 deductible. Anyone eligible for premium-free Medicare A will also be eligible for Part B. If you don’t qualify for A, you can qualify for B if you are 65 years old or older, a permanent citizen, or on disability for 24 months.  

There are some fine print details to keep in mind with Medicare Part B. If you don’t sign up for Part B at 65 and then decide you need it, you will pay a penalty of 10% of the premium for each 12-month period you delayed. You will pay this penalty for the rest of your life. This does not apply if you had health insurance through your job or your spouse’s job when you turned 65. 

What is Medicare Advantage?

Medicare Part C, also known as Medicare Advantage, is health insurance sold by private companies that offers the benefits of Parts A and Part B and often Part D (prescription drug coverage) in one insurance package. The plans may also have additional coverage, such as vision, hearing, and dental care. By law, Medicare Advantage plans must provide the same level of coverage as Original Medicare. No matter what Medicare Advantage plan you select, you’re guaranteed emergency and urgently needed care.

Some plans may mandate how you find a referral or if you must use a doctor within the network. Some plans won’t cover services from providers outside the network. Unlike Original Medicare, Medicare Advantage plans have an annual limit on out-of-pocket costs.

Most Medicare Advantage plans include a monthly fee but there are premium-free plans as well. The average 2021 Medicare Advantage premium is about $21 a month. CMS expects the average 2021 monthly premiums for Medicare Advantage plans to be the lowest in 14 years. You must still pay your monthly Part B premium each month in addition to your Medicare Advantage premiums.

Some plans are only available in certain areas. You can search for available plans on the Medicare website. Each year, plans set the amounts they charge for premiums, deductibles, and services. The insurance company (not Medicare) decides how much you pay for the covered services you get. Your payment will only change once a year, on January 1.

What is Medicare Part D?

Medicare Part D covers the cost of prescription drugs. About 45 million of the more than 60 million people covered by Medicare are enrolled in Part D plans. Plans are offered by private insurers and charge a monthly premium that averages about $33 a month. Higher-income beneficiaries pay more. As with Part B, there typically is a late penalty premium if you don’t sign up when you are first eligible. Most states have more than two dozen private insurers to choose from for Part D coverage. Every plan has its own formulary or a list of medications it covers. This list sets the price for each drug.

What About Supplement Insurance? 

Medicare Supplement insurance, or Medigap, is an addition to Original Medicare that can help offset coverage gaps. Medigap policies are sold by private insurers. Medicare Part A and Part B only cover 80 percent of services. Adding a Medigap plan covers the remaining 20 percent, eliminating coinsurance or copayments as well as some additional out-of-pocket costs. A Medigap policy only covers one person. If you and your spouse both need coverage, you will need to invest in separate policies. Also, please note that you cannot have a Medigap policy if you already have a Medicare Advantage plan.  

Premiums vary among insurance companies, but the benefits of each standard Medigap plan are the same. For a Medigap plan, you pay a monthly premium to the insurance company in addition to your Medicare Part B premium. The cost of your Medigap policy depends on the type of plan you buy, the insurance company, your location, and your age. Most Medigap policies are renewable, even if the holder has recurring health problems, as long as the premium payments are on time. Most Medigap plans help pay for your Medicare co-payments, co-insurance for hospital stays, and some other services. 

Medicare in Colorado

About 38% of older adults in Colorado with Medicare receive their benefits through a Medicare Advantage plan. There are many Medicare Advantage plans available in Colorado, depending on what county you live in. The Medicare Advantage plan options available may include Preferred Provider Organizations (PPOs), Health Maintenance Organizations (HMOs), Private Fee-for-Service (PFFS) plans, and Special Needs Plans (SNP). Some Medicare Advantage plans in Colorado have monthly premiums as low as $0. However, you are still responsible for paying Medicare Part B premiums no matter which Medicare Advantage plan you enroll in.

Medicare versus Medicaid

Let’s dig a little deeper into the differences between Medicare and Medicaid.  Medicare is a federally funded assistance program available to most U.S. citizens who are age 65 or over. At the core, Medicare is an insurance program. Medicare will pay your medical bills using the funds you paid into the program from your salary. Not only does it serve people over 65,  but it also assists younger disabled people and dialysis patients. Income is not a requirement for Medicare eligibility. Most doctors accept Medicare as payment for services. 

Medicaid is an assistance program serving low-income individuals and families. Medicaid covers the cost of medical care and long-term care. Eligibility is means-based instead of age-based and has very strict service requirements.  Medicaid may be called something different depending on the state you live in. For example, in Colorado, it is called Health First Colorado. 

Medicaid requires all states to cover certain services, including inpatient and outpatient hospital services, laboratory and x-ray services, physician services, nursing facility services, and more. States have the choice to cover other optional services such as prescription drugs, physical therapy, occupational therapy, and dental services. Please be aware that not all doctors accept Medicaid as payment.  

As you can see, there is some overlap in services between Medicare and Medicaid, but Medicaid covers more. It is possible to be in both programs. This is called “dual eligibility”. To be considered dually eligible, you must be qualified for Medicare Part A and /or Medicare Part B and your state’s Medicaid eligibility rules. Medicare will pay your medical bills first, and then Medicaid will pay what is left. 

How to Enroll in Medicare

If you are set to receive Social Security benefits when you turn 65, you will be automatically enrolled in Medicare Part A and Part B. You can turn down Part B if you have other insurance.  But, remember if you delay in signing up for Part B, your premiums will most likely increase 10 percent for each 12-month period you were eligible for Part B. 

If you need to set up your Social Security benefits, you can enroll in both Social Security and Medicare on the Social Security Administration website. You should do this in the seven-month window around your 65th birthday (which includes the three months before you turn 65, your birthday month, and the three months after you turn 65) to avoid permanent penalties. This is called your initial enrollment period (IEP). Once enrolled, your monthly premium for Medicare B will automatically be deducted from your monthly Social Security payment

If you decide to add Part B later or miss your seven-month window, you’ll need to enroll yourself during the general enrollment period (GEP), which is January 1 through March 1 every year.  If you do this, your coverage will not start until July. 

If you want Medicare Supplemental Insurance (Medigap), you should enroll during the six-month Medigap enrollment period (MEP), which starts the month you turn 65. You must already be enrolled in Medicare B. You will not be turned away for Medigap if you enroll during this time frame. After that, there is a chance you will be denied or charged higher premiums. 

There is an open enrollment period (OEP) for Medicare from October 15 through December 7 every year. This is the time frame when you can review your coverage and make changes if you want. There is also a special enrollment period (SEP) if you are over 65 and have been relying on health insurance through your job but are planning to retire or you are laid off.  You’ll have eight months after losing your insurance to enroll in Medicare without being subjected to a premium penalty.

If your head is spinning with all these different enrollment periods and rules for each, here is a handy breakdown from the Medicare folks. 

Your health is important, especially as you age. While enrolling in Medicare may seem like a daunting task, it’s one of the most important things you can do for yourself. Once you’ve made all of the decisions and done the paperwork, you can enjoy your golden years with peace of mind, knowing you will be covered should you need medical services. Don’t wait until you are 65. Start crafting your plan today.